Nebius Stock Falls Sharply on Reports of Nvidia Halting AI Cloud Deals

Shares of Nebius (NBIS) tumbled 7.8% to $207 in pre-open trading Friday after reports surfaced that Nvidia has decided to halt its revenue-sharing agreements with AI cloud companies. The news sparked a sector-wide sell-off, raising concerns about the stability of a key financial and strategic support system for the burgeoning neocloud industry.

Sector-Wide De-Risking

The reported pause from Nvidia removes a significant tailwind for neocloud infrastructure providers, according to a report from Investing.com. The revenue-sharing arrangements, which had been announced as recently as July 1, were seen as a crucial endorsement and support mechanism for the capital-intensive sector.

The investor retreat was not confined to Nebius. Peer companies, including CoreWeave and IREN Limited, also experienced sharp declines in early trading, signaling a broad de-risking event across the AI infrastructure space rather than a concern specific to a single company.

Compounding Headwinds

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The sell-off was exacerbated by a weak broader market, with the tech-heavy Nasdaq Composite falling 1.5% and the S&P 500 declining 0.6%. As a high-beta stock with a beta of 1.61, Nebius is particularly sensitive to such risk-off market sentiment.

This development adds to existing investor questions surrounding Nebius's heavy capital expenditure commitments. Despite reporting explosive 454% year-over-year revenue growth in its second quarter, the stock has struggled to maintain momentum. A recent Buy initiation from Truist Securities with a $355 price target failed to provide a lasting lift.

Investor Outlook

Nebius shares have retreated significantly from their 52-week high of $299.86, though they remain well above the low of $73.52, highlighting the stock's recent volatility. Until Nvidia provides clarity on its intentions for its AI cloud partnerships, investors appear to be trimming exposure to the high-growth, capital-intensive neocloud theme.